4 Forex Trading Tips to Be a Successful Trader

4 Forex Trading Tips to Be a Successful Trader
4 Forex Trading Tips to Be a Successful Trader

There are various surveys about how many traders make money and how many traders lose money. It indicates that 90% of traders lose their money, and only 10% of them are consistently profitable.

So the question is, how do these few people maintain their position on top of the game, and why are the majority of traders are consistently losing? What is the real reason behind all of this?

We will provide you answers in this article. This will help you understand Forex trading and how are you going to start applying it in your life. With these tips, rest assured that you’re on the right path to your journey towards trading profitability.

Tip 1: Defining Your Trading Goals and Selecting a Strategy That Fits Your Personality

One of the first things you must do as a trader is to understand what your goals are. Most new forex traders come into the market, thinking that they know what to do, but the reality is that they do not have a plan or any concrete goals. 

Only after you have set some goals for yourself, then you can start looking at various trading methods that will help you achieve these goals. You must aim to be realistic in your expectations and ensure that the trading methodology that you choose fits your personality profile.

Tip 2: Taking a Top-Down Approach and Using Multiple Time Frame Analysis

Regardless of whether you are a day trader, swing trader, or position trader, you should always try to take a top-down approach in trading. It merely means that you start with a higher time frame chart and zoom down from there to your trading time frame chart. Many traders have a habit of making wrong trading decisions based solely on the time frame in which they are trading, meaning the signal time frame.

It is wise to analyze multiple time frames to increase the probability of having a winning trade. What often happens is that you can either filter out bad trades based on higher time frame chart analysis or get further confirmation on your trade. Either way, you will likely increase your chances of winning the trade by taking a top-down analysis approach. 

Tip 3: Testing Your Strategy and Knowing Your
Expectations

Our job as a trader is to find high probability setups and execute them without letting our emotions get in the way. You have to understand that trading is all about risk control and knowing the probabilities. It is only through testing and validation of our forex trading strategies we can be confident in trading and sticking with it over the long haul. 

Just like any good Poker player knows their probability of winning a hand, we must understand what the possibilities are for any given trade within our trading setups. We have to do the necessary testing of our strategy on historical data. We can achieve our testing goals either through a backtesting software if you are using a trading system wherein the parameters are straightforward and can be tested.

Tip 4: Creating a Trade Plan and Keeping a Trading Journal

Plan your trade and trade your plan. You probably heard this saying before. It seems like this is one of the essential trading tips to keep in mind if you would like to trade in Forex. The reality is that most traders don’t have a trading plan.

You may be wondering why do you need a trading plan in the first place. Well, Forex trading doesn’t have to be complicated, and you certainly do not need to have a Ph.D. in math or economics to be a successful trader. But having a trading plan that includes the outlines and exquisite details of your trading strategy is essential in keeping you focused and accountable as a trader.

It doesn’t stop there. Once you already have a detailed trading plan, then you must keep a trading journal of all trades taken and the corresponding results of those trades.

I suggest you keep a printed record of all your trades. Try to print out the chart and make notes of what you thought when you initiated the trade and where your entry and exit points were. This will help you in understanding your thought process, and ultimately, you will become your trading coach by improving the processes behind your trading.

As traders, we must hone our strategy and learn to become more disciplined with our execution. A detailed trading plan and a frequently updated trading journal is a must if we want to accomplish all of this.

Hopefully, each of you will be able to take some of this information and apply it to your trading. These forex trading tips should be a starting point from which you build your assumptions about the market and how to incorporate a trading plan that works for you. What may be right for one person may not be right for another? Create your logical trading process so that you can improve every day.